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After Volkswagen (OTCMKTS:VWAGY) launched an initial public offering of Porsche shares, both the Porsche IPO and POAHY stock are getting a great deal of attention from investors today. That's because Porsche's shares began trading earlier today in Frankfort, Germany.
In the U.S., Porsche Automobil Holding (OTCMKTS:POAHY) — or PAH — trades under the over-the-counter symbol "POAHY." PAH uses the Porsche name, but it's actually "a holding company that has about 53% of the common stock in Volkswagen." Barron's noted a few weeks ago. So American investors who want to benefit from a potential rally of Volkswagen's shares in the wake of Porsche's IPO can buy POAHY stock.
Barron's noted that, a few weeks before the Porsche IPO, PAH's market capitalization was roughly $21 billion, while PAH's share of Volkswagen was valued at roughly $28 billion. The disparity may create an arbitrage opportunity for those who buy POAHY stock.
Important Background Information About the IPO
Just 12.5% of Porsche is available to be bought by the public. Volkswagen retains a 75% stake in the sports-car maker. And the Piech family, along with its "associates," will obtain a 12.5% stake in Porsche.
In total, the Porsche IPO generated roughly $9.2 billion, giving the entire company a valuation of $73 billion.
In 2021, Porsche's top line came in at $33.1 billion of revenue, while it generated $7.4 billion of EBITDA and its EBITDA margin was 24.5%. Conversely, Tesla's EBITDA margin last year was only 21%.
The IPO values Porsche at an Enterprise Value/EBITDA ratio of 12.9 times. Conversely, Ferrari's (NYSE:RACE) EV/EBITDA ratio is 24 times, while Tesla's (NASDAQ:TSLA) forward EV/EBITDA ratio is 43 times.
POAHY Stock and Volkswagen's Outlook
In a Sept. 27 column, I noted that "Bloomberg Intelligence predicted in June that the German automaker's EV sales will surpass those of Tesla starting in 2024." I added that the Porsche IPO will "raise money for Volkswagen's EV endeavors and should meaningfully improve the company's balance sheet."
I chose VWAGY stock as one of "7 Large-Cap Sleeper Stocks to Buy Before Wall Street Wakes Up." So for U.S.-based investors POAHY stock should be one to watch as well.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel's largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.
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